What counts as an uninhabitable property for SDLT?

Introduction

Many buyers ask whether a property was so run down at the date of purchase that it should not be treated as residential property for Stamp Duty Land Tax (SDLT) purposes. This matters because the SDLT treatment can change significantly if a dwelling was genuinely unsuitable for use as a residence at completion.

This is a common area of dispute. The legal test is strict, and recent case law has made clear that the threshold for showing a property was uninhabitable is now relatively high.

The Question

The issue is whether a purchased dwelling, because of its physical condition at the effective date of the transaction, was not suitable for use as a residence. In general terms, the buyer wants to know whether serious disrepair, missing facilities, or the need for major works is enough to take the property outside the normal residential SDLT rules.

Nick’s Explanation

Nick’s explanation, put in general terms, is that poor condition alone is usually not enough. The key question is the property’s condition at the date of completion, not what the buyer intended to do with it afterwards and not whether refurbishment was commercially sensible.

In summary, his reasoning is that the test is practical and objective: could the building still be used as a dwelling at that point in time? If the answer is yes, even if only in a basic or unattractive state, HMRC is likely to treat it as residential property. If the answer is no, the buyer would need strong evidence showing that the condition crossed the legal threshold.

That threshold is now harder to meet following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, which confirms that “not suitable for use” is a demanding test and not satisfied by ordinary disrepair, dated condition, or the fact that substantial renovation was needed.

The Law

SDLT is charged under the Finance Act 2003. The key issue in these cases is whether the subject matter of the transaction included “residential property” for the purposes of that Act.

Broadly, a building counts as residential property if it is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use. The question of suitability is assessed at the effective date of the transaction, usually completion.

The legislation does not say that a property stops being residential simply because it is in poor repair, lacks modern fittings, or requires major works. The legal question is narrower: was it suitable for use as a dwelling at that time?

Case law has developed the meaning of that phrase. The courts have repeatedly treated suitability as an objective factual test. A property is not taken out of the residential category merely because it is unpleasant, neglected, or expensive to repair.

In an uninhabitable or not suitable for use case, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Analysis

The analysis usually works in the following steps.

1. Identify the relevant date

   The condition of the property must be judged at completion. Later demolition, renovation, or rebuilding does not decide the issue.

2. Ask whether there was still a dwelling in practical terms

   The fact that a building was old, damaged, dirty, or in need of extensive refurbishment does not automatically mean it was unsuitable for use as a residence. Many properties remain dwellings even where kitchens, bathrooms, heating, wiring, plasterwork, windows, or roofs need significant work.

3. Consider whether the defects prevented residential occupation altogether

   The strongest cases tend to involve defects going to the basic ability to live there as a dwelling. For example, severe structural failure, conditions posing immediate danger, or the absence of essential features to such an extent that the building could not realistically function as a home at all.

4. Ignore the buyer’s redevelopment plans

   A plan to strip out, extend, reconfigure, or rebuild the property does not show that it was unsuitable for use before the works began. SDLT looks at the property as acquired, not the project the buyer had in mind.

5. Test the evidence objectively

   Photographs, survey reports, contractor assessments, mortgage valuation comments, local authority notices, and utility evidence may all be relevant. But the evidence must show more than disrepair. It must support the conclusion that the property was not suitable for use as a dwelling at completion.

The practical effect of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 is that the bar is high. A property can be in very poor condition and still remain residential for SDLT purposes. Missing items, outdated services, damp, infestation, damage, or even the need for extensive renovation will not necessarily be enough.

Outcome

The practical conclusion is that most run-down houses and flats will still be treated as residential property for SDLT. To succeed on an uninhabitable argument, the buyer usually needs clear evidence that, at completion, the building had ceased to be suitable for use as a dwelling in any real sense.

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, readers should assume that the condition threshold is relatively high and that ordinary refurbishment cases are unlikely to qualify.

Practical Steps

1. Check the completion date and gather all evidence showing the property’s condition on that date.

2. Obtain the survey, valuation, photographs, contractor reports, and any local authority or safety notices.

3. Separate genuine habitability issues from general disrepair or planned improvement works.

4. Review whether the building still had the practical characteristics of a dwelling at completion.

5. Compare the facts carefully with the current case law, especially Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

6. If an SDLT return has already been filed, assess whether the available evidence is strong enough to support the position taken or any proposed amendment or repayment claim.

Conclusion

A property is not non-residential for SDLT just because it is in bad condition or needs major renovation. The legal test is whether it was suitable for use as a dwelling at completion, and that is now a demanding threshold. After Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, only stronger fact patterns are likely to satisfy it.

Legal References Used

• Finance Act 2003

• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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